It’s stunts like this that drive Consumer Watchdog’s efforts to beat back the insurance lobby and regulate untenable health insurance premiums.

When I first noticed the ad below while hunting for cookie recipes, I was surprised to see a health insurance company buying a full page in the first pages of a cooking magazine. But reading it was another surprise. The headline touts “Free Annual Checkups,” and the text of the Anthem Blue Cross ad takes credit for this brand-new benefit: “100% coverage for checkups, flu shots and other preventive services.”

Anthem, however, had nothing to do with the prevention benefit. It’s a requirement of the federal health reforms passed last year. Blue Cross, along with every other major health insurer, fought to eliminate such mandatory benefits and later falsely blamed the law for outrageous, unjustified double-digit premium increases. (The prevention benefit is just one of the things that will disappear if the courts or Congress succeed in voiding the health reform law.)

Anthem must figure a deceptive claim of “free” care will make us feel better about insurance payments bigger than our mortgage.

It’s stunts like this that drive Consumer Watchdog’s efforts to beat back the insurance lobby and regulate untenable health insurance premiums.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for. Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.

The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for.

Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.

By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California. This is the same scenario that drivers faced in 1988 when mandatory auto insurance laws forced drivers to pay for policies many couldn’t afford. Voters then required auto insurers to pay drivers a 20% refund and to get permission before they ever raised rates again.

Just like in 1988, insurance stalwarts in the statehouse are now holding insurance premium regulation hostage. The companies have given the politicians millions so they can make billions overcharging you. And, as in 1988, the California Supreme Court has issued several rulings taking away the right of policyholders to hold insurance companies accountable.

If we go to the ballot with a 1988-style 20% rollback in health insurance premiums, will you be with us?

Our “Proposition 103 Part Two” ballot measure will have to be filed by November 2011 in order to begin signature collection so it gets on the ballot for November 2012.  

The main provisions of the ballot measure are as follows:

1- A 20% rate rollback in health insurance rates to reverse five years of unwarranted double-digit price gouging;

2- Require health insurance companies to seek permission from the elected insurance commissioner before raising rates, as auto insurance companies must, and application of other Prop 103 protections to health insurance companies;

3- Prohibit all insurance companies from raising your rates or refusing to renew you because of your credit score, claims or insurance history;

4- Allow consumers to join a non-profit public health plan administered by CALPERS instead of having to buy insurance from private insurance companies;  

5- Correct court rulings that have misinterpreted the law to benefit the insurance industry;

6- Create a “three strikes and you’re out of California” law for insurance companies that repeatedly violate the state’s consumer protection laws

7- Prohibit health insurance companies from forcing you to sign arbitration agreements as a condition of enrollment.  

We want to go to the ballot in November 2012. Will you be with us? Click here to sign up!

Together we can move health care reform forward in California and America.

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Jamie Court is president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell.

Health insurance companies apparently have no problem taking opposite sides of an issue when it serves their bottom line. When it comes to California law, they hate regulation and will spend any amount of money and credibility to kill it. But when it comes to protecting the profits of insurance brokers at the expense of consumers, insurance companies say (approvingly) that effective state regulation will protect consumers from premium increases. Both positions are public record, but health insurance companies apparently figured no one would ever notice.

Health insurance companies apparently have no problem taking opposite sides of an issue when it serves their bottom line. When it comes to California law, they hate regulation and will spend any amount of money and credibility to kill it. But when it comes to protecting the profits of insurance brokers at the expense of consumers, insurance companies say (approvingly) that effective state regulation will protect consumers from premium increases. Both positions are public record, but health insurance companies apparently figured no one would ever notice.

The California battle is highly public. The state is the biggest health insurance market in the nation and one of the least-regulated. So it’s no wonder tht the insurance industry is fighting a tooth-and-nail battle against state regulation that would protect consumers from premium increases of up to 86% in 12 months–as Blue Shield tried to impose in the last year. The insurance companies have clubbed doctors into submission, threatening to cut their reimbursement if decent regulation starts to squeeze record health insurance profits. They have also poured money into political contributions to key legislators, according to an Associated Press story this week.

The bill, AB 52 by Assemblyman Mike Feuer, has passed the state Assembly and is up for a vote today (Wednesday) in a key state Senate committee. Here’s a safe bet: Even if it passes and goes to the full Senate, insurers will twist every arm and make every threat to get the bill killed–or more likely, crippled by hostile amendments that would hogtie the state Insurance Commissioner.

The other side of the insurance company mouth is buried in the proceedings of the National Association of Insurance Commissioners, where only geeks go to read. Right now the organization is under pressure to back a legislative proposal in Congress that would kill a key consumer protection in the federal health reform. The bill, HR 1206 by Michigan Republican Mike Rogers, would allow insurance companies to pay brokers and agents without counting the payments as an overhead expense. This would trash the reform requirements that insurance companies spend more on health care, holding overhead and profits to 15% or 20% of insurance premiums. If they don’t have to count broker pay as overhead, health insurers wouldn’t have to lift a finger to become more efficient.

Of course, we consumer advocates have argued that if the Rogers bill passes, insurance companies will have a free pass to raise premiums.

The health insurance lobby’s response? Oh, that won’t happen because consumers are well-protected by state insurance regulations!

From a June 2 letter (see last page) by America’s Health Insurance Plans to the NAIC:

“Finally, we wish to comment on a concern we have heard that deserves a response. One commentator has expressed the concern, and assumption, that if commissions are removed from the MLR calculation, then insurers will only increase their premiums – leading to great harm to consumers. We believe this flawed assumption fails to recognize the standard of rate review prevalent in the states. Exempting commissions from the MLR calculation does not pull them from the rates, and certainly does not stimulate insurers to inflate their rates. And states are increasingly focused on assuring value for consumers in their rate review, in accordance with the ACA, making such an assertion even more unlikely.”

If states want to “assure value” in health insurance, they certainly do have to review and regulate rates, and that includes the power to approve or reject rates before they go into effect. Such prior approval is now “prevalent” in the majority of states–though not in California.

When a corporate lobby is as powerful as the health insurance industry’s, it apparently doesn’t have to worry about being consistent.

I hope state legislators weighing the California bill have a grip on how two-faced the industry deliberately is. At least the industry has admitted that regulation is the only barrier between consumers and the next flood of premium increases.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

The choice Hiltzik lays out is between legislation (AB52 by Mike Feuer) that would finally give the state insurance commissioner the power to deny or modify unreasonable health insurance rate increases before they go into effect, and the exaggerated or outright false charges being slung by the industry. That opposition campaign is just a  cover for the real issue: the power of industry campaign money and its lobbying force.

From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period…..

Across the country, prior approval of healthcare rates is becoming more the norm, now effective in 34 states and the District of Columbia for at least some policies, according to the Kaiser Family Foundation. The procedure closes a gap left by federal healthcare reform that leaves rate regulation to the states and provides only loosely for premium review. Once again, AB 52 provides state legislators with a chance to declare whom they really represent — their voters or their campaign donors.

The insurance industry is going after legislators that it has contributed to, or who otherwise look susceptible. That helps explain why the legislation barely squeaked through a key committee vote last week after two Democrats voted against it.

The final vote in the Assembly has to come by Friday. Lobbyists will be swarming the halls outside the chamber, intending to ride the last-minute chaos of speed-voting to kill the rate regulation bill. Among the lies the lobbyists will be forcing down legislators' throats is that regulation will somehow raise, not lower, insurance premiums. Again, Hiltzik nails it:

Last year both Aetna and Anthem backed away from huge rate hikes after independent actuaries found glaring mathematical errors in their rate filings.

A study in 2009 by the New York state insurance department found that these sorts of errors, and worse, were rife under that state's then-deregulated system, which resembled California's toothless regime. New York found that insurers routinely under-reported such errors and refunded (retroactively) only about a third of the ill-gotten excess to policyholders. The study helped goad lawmakers there into reinstating prior approval after about 15 years without it.

As it happens, California's health insurance lobby has tried to use New York's experience as Exhibit A for the case against prior approval. The association contends that five of the 10 states with the highest individual healthcare premiums are subject to prior approval, with New York leading the list. There's a problem with this claim, however: New York's prior-approval rules went into effect only this year. In other words, New York's high individual premiums are the result, if anything, of the absence of prior approval.

When I asked a CAHP spokeswoman where the figures came from, she said they conducted "some unique research." That's one way of putting it.

Even if AB52 passes the Assembly, it still has to take the same tortured path through the state Senate. The outrageous rate-spiking by insurance companies last year and this ought to be the final shove for honest health insurance regulation in California, just like the state has for auto and homeowner insurance. But in today's legislature, nothing is sure. To take action with a message to your legislator, click here.

If you've read this far and want to know more,  Read Consumer Watchdog’s new report on how rate regulation works to hold down premiums. And see what Sen. Dianne Feinstein says about the need for regulation.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

The health insurance industry's lobbying muscle in the California Legislature is legendary. It's the reason that the state's insurance commissioner remains all but toothless to reject outrageous spikes in health insurance premiums and rates, unlike in a majority of other states. So it's not a shock that a new version of a bill to let the state insurance commissioner reject or modify health insurance premiums barely squeaked through the state Assembly's Appropriations Committee late last week with the minimum 9 votes.

The health insurance industry's lobbying muscle in the California Legislature is legendary. It's the reason that the state's insurance commissioner remains all but toothless to reject outrageous spikes in health insurance premiums and rates, unlike in a majority of other states. So it's not a shock that a new version of a bill to let the state insurance commissioner reject or modify health insurance premiums barely squeaked through the state Assembly's Appropriations Committee late last week with the minimum 9 votes.

+++Take Action Here to Cut Insurance Premiums, Send a Message to Your Legislator+++

The bill will face another firestorm of industry lobbying when it comes up for a full Assembly vote in a few days.

This legislation ought to be a slam dunk, after Blue Shield tried to jam through premium increases of up to 86% in a single year. Aetna and Blue Cross weren't much better. The only reason any insurer backed down even a little was because of public rage, which is not a good regulatory tool in the long run. When every Californian is required to show proof of insurance as of 2014, Californians will be even more in need of protection from insurance industry greed. And nearly every major newspaper has supported health insurance regulation–the LA Times made its second strong editorial argument Tuesday. (text of editorial is below)

So what was up with the two Democrats–Charles Calderon and Jose Solorio–who voted against the rate regulation bill (AB 52, Mike Feuer)? First they reportedly tried to get author Feuer to accept last-minute substantive changes without a chance to examine what they meant–and Feuer rightly refused. Then Calderon and Soloio voted no. Hmm. Solorio is among the top five recipients of insurance industry money in the Assembly. And Calderon is the sponsor of a bill (AB 736)–strongly supported by the health insurance insurance and broker industries–that would remove consumer protections from health broker misdeeds or errors and indirectly raise health insurance premiums.

Two million Californians lost their insurance during the recession, bringing the state's total uninsured to 8 million. From the mail we get, a whole lot of people are right on the edge of having to drop Health insurance. It's long past time for the largest state in the nation to get a grip on health insurance spikes in the high double digits, even as overall medical inflation sinks to around 4% a year. Something is wrong with this picture, even if it's just right for insurance companies' record profits.

We hope Calderon and Solorio were just making a procedural protest and that they'll protect consumers, not insurance company profits, when the Assembly votes this week on AB52. It'll be close. Here's the button to Take Action.

A lid on health insurance rate increases

California regulators should be given the power to reject unreasonable increases in health insurance premiums.

May 31, 2011

Opponents of a bill that would allow state regulators to reject unreasonable increases in health insurance premiums are stepping up their attacks on the measure, contending that it would push premiums even higher and make healthcare less available. These arguments are a smokescreen, and lawmakers shouldn't lose sight of the need to give consumers of health insurance the same protection they have in auto and homeowners' policies.

One allegation is that the bill — AB 52, sponsored by Rep. Mike Feuer (D-Los Angeles) — would enrich the consumer advocates who challenge proposed rate increases. That charge is based on the bill's requirement that insurers cover the "reasonable" fees and costs incurred by advocates who make a "substantial contribution" to the ruling by regulators or the courts. The same perfectly sensible language is in Proposition 103, the initiative that empowered state regulators to reject excessive automobile, property and casualty insurance rates.

Giving consumers the opportunity to participate in rate reviews is a valuable counterweight to the shifting policies in Sacramento, where regulators' zeal often depends on who won the last election. And the "substantial contribution" requirement for getting fees reimbursed deters frivolous challenges. Consumer Watchdog, an advocacy group, says its interventions have reduced insurers' proposed auto, home and earthquake premiums by more than $2 billion since 2000; insurers have had to spend an additional $5 million to cover the consumer group's expenses.

Smaller premium increases might seem like a good thing to consumers, but evidently doctors and hospitals feel differently. Their trade associations are opposing AB 52, arguing that it could artificially reduce the rates insurers pay them. Such reductions, they say, could persuade more providers not to take Medicare and Medi-Cal patients because they count on reimbursements from private insurers to cover some of the cost of government-insured patients. But those cross-subsidies are precisely the sort of distortions and inefficiencies that policymakers should be trying to eliminate from the healthcare system, not prop up.

The healthcare reform law Congress passed last year tries to combat cross-subsidies, and it limits insurers' profit margins by tying them to the amount spent on medical care. That link, however, gives insurers a perverse incentive to grow their profits by inflating the amounts they pay doctors and hospitals. That's a good reason to give state regulators the power not just to review rates, as California law now provides, but to reject them when they're unreasonable. Here's another: As of 2014, the healthcare reform law will require all adult Americans to obtain health coverage. Regulators ought to have the power to stop insurers from gouging that captive market.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Washington D.C. — It's hard to imagine that a briefing on rate regulation and a new Consumer Watchdog report would draw a fascinated audience, but this is DC.  Journalists and nonprofit advocates spent 90 minutes Wednesday as Sen. Dianne Feinstein and an expert panel made an impassioned call for getting health insurance companies under control with tough regulation of the rates they can charge. As the senator put it, without mincing a single word:

“While insurance premiums continue to spiral out of control, CEO's paychecks are getting bigger, and insurance companies are spending less on medical care and more on profits. Today, in 17 states including California, state regulators do not have authority to block or modify insurance rate increases that are excessive, unjustified, or discriminatory. In order to protect consumers from skyrocketing insurance premiums, state regulators need this explicit authority to ensure rates are justified. This is why I have introduced the Health Insurance Rate Review Act of 2011, and why I have endorsed state legislation in California, AB 52, to close this loophole.”

The senator was the lead speaker as Consumer Watchdog released a report leaving no doubt that the only way to protect consumers from spiraling rate increases is what's called prior approval rate regulation: The insurance commissioner gets to see rate increases well ahead of time and can reject them outright or demand modification. Consumers can challenge excessive rates on their own, and be paid for their time. It's the only way to keep insurance companies honest, and also enlist them in actually helping to keep down overall health costs.

The report, called “Health Reform and Rate Regulation: Can't Have One Without The Other,” outlines why California has the best, most protective model of rate regulation–except it applies only to auto and other property and casualty insurance. The report illustrates both successes and failures in other states, and outlines a role for the federal government in making sure states protect consumers.

For the short version, here's the news release.

Consumer Watchdog founder Harvey Rosenfield, Washington director Carmen  Balber and Maine Superintendent of Insurance Mila Kaufman (a creative and fair consumer advocate) held a lively panel discussion–the journalists present stuck around for the whole thing, which is not the usual way.

Video is to come–I know that with a topic as delicious as rate regulation, no one can wait.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.